A) more liquidity in the market
B) less liquidity in the market
C) no change in the liquidity in the market
D) mobilisation of more deposits by Commercial Banks
Correct Answer: A
Solution :
Exp. [a] Bank rate is the rate at which the RBI lends to the Commercial Banks. So, when the rate is reduced, banks borrow more and lend more to retail loan seekers thus infusing more liquidity, meaning higher off take of currency supply, in the system.
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